Japan Surges in Asian Rally

123jump.com Staff
10 Nov, 2008
New York City

Japan stocks surged on the speculation that economic stimulus package from China will lift machinery demand. Shipping lines and construction machinery companies rose. Tokyo stocks surged 6%. Japan foreign exchange reserve declines $18 billion to $977 billion at the of October.

[R]5:00AM New York, 7:00PM Tokyo - The foreign currency reserves of Japan fall to $977 billion in October.[/R]

Japan stock indexes rose led by machinery stocks and shipping lines on expectations that the Rmb4 billion stimulus plan in China will boost demand.

Commodity stocks gained as well.

In Tokyo trading Nikkei 225 rose 5.8% or 498.43 to 9,081.43.

In the first section of the Tokyo Stock Exchange 21 billion shares worth 1.6 trillion yen were traded and in the second section 275 million valued at 2.6 billion yen changed hands.

Of the Nikkei 225 index shares 219 rose, 5 declined, and one was unchanged. Hitachi Construction Machinery led the gainers.

China Unveils Rmb4 trillion Stimulus Package

China's State Council announced yesterday a Rmb4 trillion or $585 billion package that will be used in the next two years to prop up growth in low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding.

China will also cut taxes, and begin massive infrastructure spending programs in order to shrug off the adverse effects of the global economic crisis.

Higher investments will be committed to facilitate economic restructuring, promote growth potential and spur private consumption.

China has shifted its focus from restricting growth through monetary tightening to boosting economic growth.

The consumer price index is expected to fall further from the 4.6% gain in September.

Industry costs will be cut by Rmb120 billion through the reform of value added tax, while commercial bank ceilings will be scrapped to encourage lending to rural areas, small enterprises and industrial rationalizations through mergers and acquisitions.

An estimated Rmb400 billion will be invested across the nation in the fourth quarter.

The report notes that the country is changing its policy to “active” fiscal from “moderately active” monetary policies to sustain growth.

The State Council noted, “As long as we take the right measures in a resolute and timely way to grasp the chance and rise to the challenges, we will surely secure steady and relatively fast economic growth.”

Japan's Foreign Currency Reserves Fall to $977 billion

Japan's Ministry of Finance reported today that the country's foreign exchange reserves fell by $18 billon from the end of September to $977 billion at the end of October, below $1 trillion for the third straight month.

Foreign currency reserves stood at $955 billion, with securities worth $853 billion and deposits valued at $102 billion.

The IMF reserve position stood at $1.4 billion, Special Drawing Rights were $2.9 billion, while gold and other reserves were at $18 billion and $345 million respectively.

G-20 Advocates For Heightened Supervisory Regimes

The G-20 finance ministers and governors said in a communiqué published yesterday that all countries should deal with risks associated with excessive deleverage and improve on regulatory and supervisory regimes in order to promote accountability and transparency in financial markets.

The meeting largely puts the blame on the U.S. but failed to do so in the public statement. The lax lending standards and weak regulatory oversight was compounded by a collapse in the mortgage securities ratings that most investors rely on.

Gainers & Losers

Hitachi Construction Machinery led advancers in the Nikkei 225 index shares with a rise of 18.9% followed by increases in Credit Saison Co. of 18.9%, in Kubota Corp. of 16.9%, in Fujikura Ltd. of 16%, and Comsys Holdings of 14.6%.

Hitachi Construction Co. rose after China unveiled Rmb4 trillion stimulus package that is expected to boost economic activity in the region.

Shipping lines gained. Mitsui O.S.K. Lines soared 12% and Kawasaki Kisen gained 8.7%.

Sumitomo Metal Industries rose 10.3% after metal prices increased. Copper futures increased 7.5% and gold prices edged up 1.9%.

Sanyo Electric led decliners in the Nikkei 225 with a fall of 9.1% followed by losses in Nichirei Corp. of 2.6%, in Japan Airlines of 0.9%, in Tokyu Corp. of 0.5%, and Kikkoman Corp. of 0.2%.

Japan Airlines fell after crude oil for December delivery rose 5.3% to $64.3 per barrel.